USA Acquired Equipment at no cost - treatment


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Hello -
My company recently did a fixed asset audit, and found large pieces of equipment that weren't on the books.
Come to find out, one of the pieces of equipment was acquired after we rented it from a company that went out of business. We kept the equipment at no cost.

How should have these been recorded? Debit should have been equipment, would the credit just be to a gain/loss account?

Fast forward to today - should we place this equipment on the books?

Looking for any guidance in the codification - but not sure it exists in this unique situation.
 
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kirby

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Being able to legally keep abandoned property is covered by your state's laws. Some require certain steps on your part before you can do this. But let's press on to the accounting part.

Under the cost basis of accounting, if you keep the property then you record it at cost. In your case that cost is zero. Well really at least $1.00 because the acctg system needs a non-zero amount.

There's no gain to record unless you sell it. But then there's a problem 'cause in your sale you usually have to represent that you have "good title" to the equipment. Which brings you back to the issue in my first paragraph.
 

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